Chicago has reasonably solid plan for 2016 Olympics, auditor says

Civic Federation also urges City Council to keep close tabs on Chicago 2016

Mayor Richard Daley's Olympic committee has a reasonably sound financial plan, but aldermen must keep a close eye on Chicago 2016's operations, according to a six-week review of the bid team's finances by the Civic Federation.

The 100-plus page review was requested by the City Council to test the financial assumptions put forth by bid officials about whether the 2016 Summer Games would be profitable. Fears that the Games would lose money and burden taxpayers have dominated public debate in the months before the Oct. 2 selection of a host city.

The watchdog group cautioned that the review was not a thorough financial audit and that time constraints limited the depth of the analysis. But the federation nonetheless said if Chicago 2016 sticks to its plan to buy additional insurance, the extra coverage would create "an effective safety net" to protect taxpayers in the event of problems such as cancellation of the Games, natural disasters or "loss of development financing."

The report also said it was critical for the City Council to use its oversight powers to monitor the city's Olympic plans. But that appears to miss the political reality of City Hall, where aldermen routinely have followed Daley's lead and rarely challenge his major plans.

"The greatest risk that we see for the City of Chicago and the taxpayers is if they get the bid and fail to follow the plan and carry out the professional level of oversight that is necessary," Civic Federation President Laurence Msall said.

The federation hired a consulting firm, L.E.K. Consulting, to do most of the work. The London-based firm is bidding on a city contract at O'Hare International Airport that will be decided by the Daley administration, a fact Msall said did not present a conflict of interest.

Ald. Manny Flores (1st) said the report reinforces his calls for greater council oversight of the Games.

"If Chicago wins, we should have a specific plan in place that deals with oversight and with transparency," Flores said. "I think the council is up to the task."

Among the greatest risks in the Olympic plan is the impact that a changing real estate market could have on the financing of the billion dollar Olympic Village, according to the report. To address that risk, the Olympic committee's plan calls for multiple developers to spread the financial burden in addition to the proposed insurance policies.

The report also cautioned that some of Chicago 2016's revenue estimates appeared optimistic. "Local sponsorships are predicted to be substantially higher than previous Games, and estimated revenues from donations are aggressive when compared to past Olympic budgets," the report noted.

But the federation found that the revenue projections did not pose a "significant risk" to hosting the Games.